Warning: Diamond Foods Restatements May Contain Nutty Accounting

Written by: Antoine Gara11/14/12 - 7:45 AM EST

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Three other issues Wrede highlights are clarity on the company's future cost structure in its walnut and snacks businesses, detail on the strength of its balance sheet given the prospect of shareholder lawsuits, and an outlook on how to grow the business now that Pringles has fallen into the hands of a competitor and suppliers are demanding higher costs.

The company also needs to appoint a permanent CFO and give investors a sense of whether it will replace restructuring specialists who have taken the reins of the company with permanent executives, according to Wrede.

Previous to Oaktree's investment, Diamond Foods' lenders agreed to a forbearance on its debt after the company suspended its dividend and began to work with financial advisor Dean Bradley Osborne to raise capital and maintain covenants.

In May, Diamond Foods hired Brian Driscoll, a former Hostess Brands and Kraft Foods executive as its new CEO.

Diamond Foods troubles began in February when an audit committee review of its finances found significant accounting inconsistencies for its walnut supplies, forcing the immediate suspension of its CEO Michael Mendes and CFO Steven Neil. The review also cast doubt on the accuracy of two years' worth of earnings statements, and delayed three quarters of earnings filings.